March 28 - Bloomberg (William Selway and Jeremy R. Cooke): "California is
selling $4.77 billion of debt, the largest issue of U.S. municipal bonds so
far this year, seizing upon tax-exempt borrowing rates that remain near their
lowest point since the 1960s... It is the state's third sale of more than $1
billion of bonds in two months, which may force the state to offer a higher
yield to attract investors."

March 30 - Bloomberg (Lester Pimentel): "Emerging-market bonds rose, pushing
yield premiums over Treasuries to near a record low... The average spread,
or extra yield, for developing countries' bonds over U.S. Treasuries declined
3 basis points...to 1.65 percentage points, the narrowest since a record low
reached Feb. 22..."

Total Commercial Paper surged $58 billion last week to a record $2.055
TN, with a y-t-d gain of $80.8 billion (16.4% annualized). CP has increased
$155 billion (21.1% annualized) over 20 weeks and $344 billion, or 20.1%,
over the past 52 weeks.

Asset-backed Securities (ABS) issuance jumped to $22bn. Year-to-date total
ABS issuance of $180bn (tallied by JPMorgan) is now running only slightly behind
the $184bn from comparable 2006. At $92bn, y-t-d Home Equity ABS issuance is
badly trailing last year's $136bn. Year-to-date US CDO issuance of $86 billion
is running 32% ahead of comparable 2006.

Fed Foreign Holdings of Treasury, Agency Debt increased $3.9bn last week
(ended 3/28) to a record $1.880 TN, with a y-t-d gain of $128bn (29.1% annualized). "Custody" holdings
have expanded at a 28% rate over 20 weeks and 18.1% y-o-y ($288bn). Federal
Reserve Credit last week added $1.0bn to $852.1bn (unchanged y-t-d). Fed
Credit was up $38bn y-o-y, or 4.7%.

International reserve assets (excluding gold) - as accumulated by Bloomberg's
Alex Tanzi - were up $811 billion y-o-y (19.1%) to a record $5.065 TN.

March 29 - Bloomberg (Maria Levitov): "Russia's foreign currency and gold
reserves soared $10.9 billion, the biggest gain since the central bank began
reporting weekly statistics in June 1998... The reserves, the world's third
largest, rose for a fourth consecutive week to a record $332.6 billion..."

Currency Watch:

The dollar index declined 0.4% to 82.66. On the upside, the Thai baht gained
1.3%, the Israeli Shekel 0.8%, the Iceland Krona 0.8%, and the Canadian dollar
0.7%. On the downside, the Colombian peso declined 1.5%, the South African
rand 0.5%, and the Indian rupee 0.4%.

Commodities Watch

March 26 - Bloomberg (Alaric Nightingale): "Steel use will climb to a record
1.2 billion tons this year as Chinese consumption increases, the International
Iron and Steel Institute said... Total consumption will rise 65 million tons,
or 5.9%, this year and a further 6.1% in 2008..."

March 27 - Bloomberg (Mayumi Otsuma): "Bank of Japan Governor Toshihiko Fukui
said he's monitoring land prices after a report showed gains of as much as
46% in parts of Tokyo last year. 'We aren't yet in a situation in which land-price
gains warrant concern of excessiveness, but we'd like to keep a close watch
on them...Rising land prices won't automatically prompt a rate increase.' Commercial
land prices in Japan's three biggest cities rose 8.9% in 2006..."

China Watch:

March 26 - Market News International: "Chinese retail sales rose 16.9% in
February to 701.3 bln yuan, with consumer purchases boosted by the week-long
New Year holiday... Retail sales rose 12.7% in January...."

March 29 - Bloomberg (Samuel Shen): "China's restaurant sales may surge 17%
to about 1.2 trillion yuan ($155 billion) this year, driven by rising incomes,
after rising 16% to 1 trillion yuan last year, according to the nation's government."

March 26 - Bloomberg (Ian King and Janet Ong): "Intel Corp. said it chose
China for its first new computer-chip factory in 15 years, investing $2.5 billion
to be closer to customers in a country that assembles about 50 percent of the
world's personal computers."

March 30 - Bloomberg (Cherian Thomas): "India's central bank raised a key
interest rate a month before its scheduled policy review because of a failure
to bring down inflation from a near two-year high. The Reserve Bank of India
increased its overnight lending rate by a quarter percentage point today to
a 4 1/2 year high of 7.75%."

Asia Boom Watch:

March 27 - Bloomberg (Shamim Adam): "Asia's developing economies will grow
7.6% this year, faster than earlier forecast, as a pick-up in spending by consumers
and companies cushions the impact of weaker exports, the Asian Development
Bank said. Growth in Asia excluding Japan and Australia in 2007 will exceed
a September estimate of 7.1%..."

March 28 - Bloomberg (Wahyudi Soeriaatmadja): "Indonesia's economy, the largest
in Southeast Asia, may grow as much as 6.8% next year, Finance Minister Sri
Mulyani Indrawati said."

Unbalanced Global Economy Watch:

March 27 - Bloomberg (Marie-Louise Moller and Sheyam Ghieth): "Dutch Finance
Minister Wouter Bos comments... on the main risks to growth: 'Well there are
risks. The American dollar, the oil price, everybody acknowledges that those
are risks. There's one other factor that we have found differing opinions about
and that is the question whether a possible crisis in the American housing
and mortgage markets, whether that will actually have a negative impact on
the European economy."

March 29 - Bloomberg (Brian Parkin): "Germany's unemployment rate fell to
the lowest in almost six years in March as booming export growth encouraged
companies to step up hiring and construction orders surged after the mildest
winter on record. The...jobless rate fell in March to 9.2% from 9.3%..."

March 29 - Market News International: "French unemployment fell more than
expected in February, enough to trim the ILO jobless rate to the lowest level
since June 1983, according to preliminary...data released...by the national
statistics institute Insee."

March 27 - Bloomberg (Francois de Beaupuy): "French housing starts plunged
15.1% in the three months through February, the steepest drop since January
2001, suggesting a real estate boom is losing steam."

March 29 - Bloomberg (Simone Meier): "The Swiss government raised its economic
growth estimate for this year as companies boost spending and hiring to meet
orders, encouraging consumer demand. Gross domestic product may rise 2 percent
this year, the State Secretariat for Economic Affairs...said...an increase
from the 1.7% growth predicted in December."

March 27 - Bloomberg (Jonas Bergman): "Swedish household debt grew an annual
12% in February, slowing from the previous month... Household borrowing growth
slowed from 13% in the same month a year earlier..."

March 29 - Bloomberg (Jonas Bergman): "Sweden's National Institute of Economic
Research revised up its forecasts for economic growth this year and next as
the labor market strengthens and consumer spending growth accelerates. The
economy will expand 3.9% this year, compared with a December forecast of 3.6%..."

March 29 - Bloomberg (Robin Wigglesworth): "Norway's jobless rate fell to
2.1% in March, the joint lowest since 1988, increasing concern that a labor
shortage will push up wages and add to pressure on the central bank to raise
borrowing costs."

March 28 - Bloomberg (Matthew Brockett): "Money-supply growth in the euro
region unexpectedly accelerated to the fastest pace in 17 years in February,
strengthening the case for the ECB to keep raising interest rates. M3 money
supply, which the ECB uses as a gauge of future inflation, rose 10% from a
year earlier after increasing 9.9% in January..."

Bubble Economy Watch:

February Personal Income was up a stronger-than-expect 0.6%, with a y-o-y
gain of 5.3%. February Personal Spending was also up a stronger-than-expected
0.6%, with Spending up 5.6% y-o-y. The March reading for the Chicago Purchasing
Managers index was the highest (61.7) since April 2005. February New Home Sales
were at the lowest level since February 2000.

March 28 - United Press International: "The U.S. legal system imposes a cost
of $865 billion a year on the U.S. economy, or $9,800 a family, a San Francisco
'free-market' think tank reports. The costs associated with civil lawsuits,
and the fear of them, is 27 times more than the federal government spends on
homeland security; 30 times what the National Institutes of Health dedicates
to biomedical research; and 13 times the amount the U.S. education department
spends to educate children, the Pacific Research Institute says."

March 27 - Bloomberg (Stefan Whitney): "As many as 2.4 million Americans may
lose their homes because of the collapse of subprime lenders, the Center for
Responsible lending said in testimony... Mike Calhoun, President of the Durham,
North Carolina-based nonprofit group, told the U.S. House Committee on Financial
Services... 'Homeownership has been thwarted rather than supported' by subprime
loans, Calhoun said."

March 28 - Bloomberg (Daniel Taub): "The words 'New Century' used to flash
several times a day on caller ID at Taleo Mexican Grill in Irvine, California,
where diners wash down Salmon Veracruz with $7 hand-shaken margaritas. Reservations
were often for 10 or more. Not anymore, said Nic Villarreal, the owner of the
restaurant, located two blocks from New Century Financial Corp.'s headquarters.
'We don't get any.' In Irvine, where just nine months ago office vacancies
approached a three-year low, home prices were at an all-time high, and unemployment
was less than the national average, at just 3.6%, the unraveling subprime mortgage
market is ruining the recent prosperity. Hometown lenders including New Century
and Ameriquest Mortgage Co. already have fired more than 3,000 people, house
and condominium prices are down 17% since June and office vacancy rates are
poised to double this year..."

Financial Sphere Bubble Watch:

March 30 - Bloomberg (Alison Vekshin): "U.S. bank revenue from trading
derivatives rose to a record $18.8 billion in 2006, driven by high client
demand among hedge funds and other large institutional investors. Revenue
grew 31% from $14.4 billion in 2005, the previous record, the U.S. Office
of the Comptroller of the Currency said... The notional value of credit
derivatives, the fastest-growing derivatives market, increased 55 percent
to $9.0 trillion in the fourth quarter..."

March 30 - Dow Jones (Damian Paletta): "The notional amount of derivatives
held by federally insured U.S. banks was a record $131 trillion in the fourth
quarter of 2006 in part because of a jump in the holdings of credit derivatives,
the Office of the Comptroller of the Currency said... The $131 trillion
figure is 30% higher than the fourth quarter of 2005... 'The continued
strong growth of credit derivatives reflects their importance as a source of
managing and dispersing risk and we do not foresee any decline in the significance
of this class of derivatives in future time periods,' said Kathryn E. Dick,
the OCC's deputy comptroller for credit and market risk."

Mortgage Finance Bubble Watch:

March 26 - American Banker (Cheyenne Hopkins): "As problems in the subprime
mortgage market have continued to surface, so has a significant spike in mortgage
fraud. The number of suspicious activity reports filed last year by banks,
thrifts, and credit unions on suspected mortgage fraud rose 43% from a year
earlier, to a record 37,313, according to figures from the Financial Crimes
Enforcement Network... The subject is a hot topic among industry representatives,
who warn that the fraud extends beyond small-time crooks trying to get rich
during the housing boom. "Law enforcement is finding increasingly... [mortgage
fraud] involves drug cartels, organized crime, and is even being used for terrorist
finance purposes,' Andrew Sandler, a partner at Skadden, Arps, Slate, Meagher & Flom
LLP, said..."

March 28 - Bloomberg (Mark Pittman): "Subprime mortgage-backed securities
from 2006 may be the 'worst-performing in recent history,' with delinquencies
on the underlying debt 'consistently higher' than in the prior five years,
S & P said. About 13% of mortgages made last year to people who have poor
or bad credit are delinquent, S&P analysts Michael Stock and Scott Mason
said...with 6.65% of the total classified as 'seriously delinquent,' or more
than 90 days late. Losses on bonds backed by the loans will be between 5.25%
and 7.75%, compared with 5.5% in 2000... 'It was the layering of risk,' Stock
said... 'There is no equity in the home, no income verification and a first-time
homebuyer.'"

March 27 - Bloomberg (Gene Laverty): "Ameriquest Mortgage Co. asked to be
released from its Nascar contract as the lender sheds sports sponsorships to
preserve cash. The Irvine, California-based company wants to be released from
the final two years of its three-year contract... Ameriquest, once the biggest
provider of subprime loans, agreed March 19 to return the naming rights to
Major League Baseball's Texas Rangers Stadium..."

MBS/ABS/CDO Watch:

March 26 - Bloomberg (Darrell Hassler): "Sales of bonds backed by mortgages,
credit cards, student loans and other assets fell by 11% to $6.37 billion last
week as new issues of home loans plunged. Asset-backed securities sales dropped
from $7.17 billion in the week ended March 16... New issues of mortgage-backed
securities, consisting mainly of subprime loans for borrowers with poor credit
or high debt, fell 46% to $3.21 billion."

March 27 - Bloomberg (Jody Shenn): "Some collateralized debt obligations may
face 'severe' ratings cuts because they hold subprime mortgage bonds, according
to Moody's... Subprime mortgage securities made up about 45 percent of the
holdings of structured-finance CDOs, or those owning asset-backed debt, issued
last year, Moody's said... About $179 billion of structured-finance CDOs were
created in 2006, according...to JPMorgan... The impact of downgrades on the
underlying collateral would be 'generally mild to moderate' for those CDOs
with up to average exposure 'but could be severe for the most heavily exposed
transactions...'"

March 26 - Bloomberg (Mark Pittman): "Bonds backed by automobile loans may
be hurt by rising subprime mortgage defaults as people with poor credit struggle
with their household debt, according to Standard & Poor's. Capital One
Financial Corp., Wachovia Corp., Wells Fargo & Co., and other lenders have
lent more funds to people with bad credit scores in the past few years to sustain
growth, S&P said... The loans are also for longer terms, increasing the
probability of default... About 68% of 2006 subprime auto loans were due in
five years or more... 'There could be some fallout from subprime in auto loans,'
[S&P analyst] Risi said... 'We don't have much data yet. We're still in
collection mode. It's probably going to be hard to say for a while.'"

Real Estate Bubbles Watch:

March 29 - Market News International (Claudia Hirsch): "Non-residential construction
costs for materials and labor are rising amid robust U.S. building activity,
according to general contractors and national builders. Construction executives
said they fear a possible return of rapid price increases for materials like
steel, copper and concrete. Strong growth in commercial and public-sector building
activity is a main driver of prices, while global demand is also at play, they
said. Labor availability remains tight as the non-residential construction
trades chug along. Sluggish homebuilding markets provide little relief on materials
prices or labor supply."

March 27 - Bloomberg (Michael B. Marois): "About 200 residents of a trailer
park and apartment complex outside Sacramento, California, are voting today
on the fate of a $750 million school-bond measure. The Folsom Cordova Unified
School District is holding a special election for the bond after a November
vote on the same measure was marred by faulty election maps. The borrowing
was proposed in anticipation of development expected to bring 37,000 new homes
to the area in the next two decades."

M&A and Private-Equity Bubble Watch:

March 30 - New York Times (Peter Edmonston): "After breaking the record
for mergers and acquisitions last year, deal makers have started 2007 at
an even faster pace. With the first quarter drawing to a close, the value
of corporate deals announced through Wednesday reached $1.08 trillion,
according to Thomson Financial. That is 24% more than the value of deals
in the first quarter of 2006. The tempo has slowed from last year's fourth
quarter, when $1.2 trillion in transactions were announced... Many of the
conditions favorable to deals remain in place, including an accommodating
credit market and an abundance of well-financed private equity firms. 'We
are still in an accelerating mode,' said Robert Filek, a partner...at PricewaterhouseCoopers.
He added that deals this year could break the record set in 2006, when there
were about $3.8 trillion in announced transactions - up 38% from 2005."

Energy Boom and Crude Liquidity Watch:

March 28 - Bloomberg (Will McSheehy): "Companies from Gulf Arab states, led
by issuers in the United Arab Emirates and Saudi Arabia, will almost double
sales of bonds this year, according to Moody's... Gulf companies will sell
about $30 billion of bonds in 2007, to finance expansion and tap local and
European demand for debt, Moody's said..."

Fiscal Watch:

March 29 - Bloomberg (William Selway): "Florida's tax receipts are falling
for the first time since 1975 as a slump in construction and home sales dims
the economy of the sunshine State. 'We've been on a pretty steep incline,'
said Florida State Senate Majority Leader Daniel Webster... 'There was always
going to be an end to that, and it's flattened out.' States from New Jersey
to California are getting pinched, just a year after many enacted the biggest
spending increases in almost two decades. They're drawing down $16.6 billion
from reserves this year - 29% of their total savings... 'A lot of states are
starting to worry,' said Iris Lav, who follows state budgets for the Center
on Budget and Policy Priorities... 'We have yet to see the effects of the bursting
of the property bubble.'"

Q1 Global Liquidity Watch:

March 30 - Reuters: "Global debt issuance rose 3% to $1.73 trillion in the
first quarter, led by a surge in corporate bond sales as companies sought financing
for mergers and acquisitions, according to data from Dealogic. Global issuance
of corporate bonds was up 22 percent to a record $700.54 billion in the first
quarter, including $626.3 billion of high-grade debt and $74.3 billion
of junk-rated debt, Dealogic reported."

March 29 - Financial Times (Lina Saigol and James Politi): "Global mergers
and acquisitions topped $1,000bn in the first three months of this year,
the busiest first quarter on record. The boom, driven by buy-out fever,
ambitious chief executives, and cheap financing saw the volume of deals reach
$1,130bn in the first quarter, a rise of 14% on the same period last year,
according to Dealogic the data provider."

March 30 - Reuters (Jessica Hall): "U.S. merger activity in the first quarter
surged 21% in value from a year ago as private equity firms and corporate
buyers shrugged off stock market volatility and poured money into sectors
such as energy, real estate and financial institutions. Globally, announced
mergers reached about $1.2 trillion for the first three months, the strongest
first quarter ever and only the third time quarterly M&A volume has
exceeded $1 trillion, according to...Dealogic. First-quarter merger volume
in the U.S. totaled $428.7 billion, compared with $352.1 billion a year earlier,
Dealogic said."

March 30 - Reuters (Jonathan Stempel): "U.S. high-grade and junk bond issuance
rose in the first quarter compared to the same period last year, driven by
financing for mergers and leveraged buyouts, Thomson Financial said on Friday. U.S.
companies sold $38.6 billion of high-yield bonds in the first quarter, up from
$29 billion for the same period last year... 'There is a substantial
amount of demand for high-yield product,' said Jim Merli, global head of
fixed-income at Lehman Brothers... 'The LBO calendar is fueling a significant
portion of issuance.' High-grade bond sales totaled $272.5 billion in the
first quarter, up from $241.8 billion for the first quarter last year...
'March is one of the busiest months we've had in investment-grade,' Merli said.
'M&A activity, the need to fund capital expenditures and historically attractive
funding levels should continue to lead to a relatively high level of primary
market activity.' U.S. high-grade corporate bond sales hit a monthly record
in March at $98.6 billion...The financial sector accounted for about
72 percent of the total, much of it in floating-rate notes...

March 30 - Reuters: "Federal agency debt issuance grew to $214.7 billion
in the first quarter from $171.7 billion in the same quarter last year,
boosted by new short-term and callable supply, Thomson Financial said on
Friday."

March 30 (Reuters) - U.S. mortgage-backed securities issuance totaled $247.7
billion in the first quarter of 2007, down from $261.4 billion in the same
period a year earlier, Thomson Financial said on Friday."

March 30 - Reuters (Brian Kelleher): "Asia Pacific equity and merger deals
had another bumper quarter as new listings from China and mega acquisitions
in India set the pace for what is likely to be another record year of regional
investment banking activity. Investment banking fees for the region, excluding
Japan, rose to $1.1 billion, up 8 percent from the first quarter of 2006 as M&A
activity jumped 42 percent, according to...Dealogic. Last year was a record
for investment banking activity in the region...but bankers and lawyers said
2007 may be even better. 'The record setting activity of last year shows no
signs of abating,' said Roger Denny, partner and head of M&A, Asia for
law firm Clifford Chance. 'What we've been working on and what's in the pipeline
suggests it could be another record year.' M&A volume hit $105 billion,
a record for the first quarter, as India took centre stage."